AT&T Inc. (NYSE: T) stock had fallen significantly from its highs, and the leading telecom is supposed to be one of the safer companies for income investors. The fear was that AT&T’s dividend might be pressured as the company has vast debt at a time when the value of Time Warner would not be much lower than when it was acquired. According to AT&T, that just isn’t the case.

AT&T’s COVID-19 update showed that the company is financially strong with a healthy balance sheet and ample liquidity. It had roughly $12 billion in cash on the books at the end of 2019, and since that time it issued about $4 billion from preferred stock issuances in February, which also came at lower yields than it pays on its common stock. While AT&T executed a $4 billion accelerated share repurchase plan in March of 2020, the company canceled that plan, which was to be conducted during the second quarter.

Its operating businesses are also expected to support the dividend payments and to keep on track of retiring debt. AT&T also expects to bring in roughly $2 billion later this year from its already announced divestiture of CME and additional capital coming in as it monetizes its stakes in real estate and towers. AT&T anticipates closing the sale of its Puerto Rico and U.S. Virgin Islands operations, and the capital brought in will be used to retire an outstanding preferred interest.

The company has brought on a $5.5 billion term-loan agreement that came from 12 different banks in an effort to shore up additional capital. Also shown in the update was that it has continued access to selling commercial paper and has access to the bond markets and other financing activities that will continue under its normal financing activities.

As for the dividend, the press release said:

As it has for the past 36 years, the company looks forward to continuing to pay a quarterly dividend to shareholders. On March 27, the Board of Directors declared a dividend payable on May 1, 2020, to stockholders of record of its common and preferred shares at the close of business on April 9, 2020.

At the current share price, AT&T still pays its common shareholders a 6.8% dividend yield, which is significantly higher than at many companies in telecom, communications and media.

AT&T stock traded up 3.5% at $30.50 on Tuesday morning. Its 52-week trading range is $26.08 to $39.70, and its Refinitiv consensus analyst target price was still up at $36.70.

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